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Equities

Canada’s main stock index rallied early Friday alongside world markets. South of the border, Wall Street’s main indexes also jumped at the start of trading, buoyed by White House plans for reopening the U.S. economy and reports that early anecdotal data from a drug trial showed promise in treating COVID-19.

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At 9:33 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 235.86 points, or 1.7 per cent, at 14,135.18.

In the United States, the Dow Jones Industrial Average rose 279.47 points, or 1.19 per cent, at the open to 23,817.15. The S&P 500 opened higher by 42.88 points, or 1.53 per cent, at 2,842.43, while the Nasdaq Composite gained 135.12 points, or 1.58 per cent, to 8,667.48 at the opening bell.

Late Thursday, U.S. President Donald Trump laid out new guidelines for reopening the U.S. states in a three-stage approach. The move bolstered stocks even though the measures largely left decisions to individual states.

Further helping sentiment were reports that partial results from a trial of Gilead Sciences Inc.'s experimental drug Remdesivir showed some promise in treating severe COVID-19 patients. Gilead shares were up about 7 per cent in early trading, although the company also cautioned that “the totality of the data need to be analyzed in order to draw any conclusions from the trial.”

Medical news website STAT had reported that a University of Chicago hospital participating in a study of the antiviral medication said it is seeing rapid recoveries in fever and respiratory symptoms. However, UChicago Medicine told Reuters in an e-mailed statement that “partial data from an ongoing clinical trial is by definition incomplete and should never be used to draw conclusions.”

Still, those developments helped offset news that China’s economy shrank 6.8 per cent in the first quarter of the year for the first time on record. Economists had been expecting a contraction of about 6.5 per cent, retracing the fourth quarter’s 6-per-cent expansion.

By early Friday, MSCI’s all-country index pointed to gains of more than 10 per cent for world stocks for the week.

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“The double whammy of U.S. lockdown exit plans and, more importantly, a potential coronavirus treatment from Gilead has given investors cause for optimism heading into the weekend,” OANDA senior analyst Craig Erlam said. “It feels a long time since the weekend wasn’t treated with caution and fear but there’s certainly a feeling now that we’re moving in the right direction. The news is improving.”

"It’s worth noting that the clinical trial was very small, despite the seemingly very positive results and everyone is being urged to treat them with caution but let’s face it, we’ve waited a long time for some hope in the fight against this horrendous disease, people are going to get carried away."

In this country, Bank of Canada Governor Stephen Poloz told the House of Commons finance committee late Thursday that a recovery from the impact of the COVID-19 pandemic will be as sharp as the drop seen in recent weeks. But he also suggested, even with strong fundamentals, it would take at least a year for the economy to return to its full strength.

Overseas, major European markets remained firmly higher by afternoon with the pan-European STOXX 600 advancing nearly 3 per cent. Britain’s FTSE 100 rose 3.07 per cent. Germany’s DAX gained 3.45 per cent. France’s CAC 40 rose 3.90 per cent.

In Asia, Tokyo’s Nikkei gained 3.15 per cent. The Shanghai Composite Index ended up 0.66 per cent and Honk Kong’s Hang Seng rose 1.56 per cent.

Currencies

The Canadian dollar bounced higher alongside rising equity markets as optimism over the opening of global economies improved risk sentiment.

The day range on the loonie so far is 70.83 US cents to 71.40 US cents. Early Friday, the loonie had languished near the bottom of that spread as crude prices struggled, but found its footing and breached the 71-US-cent level as world markets rallied.

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“It seems possible that Canadian dollar softness is linked to the slide in WTI to the lowest since early 2002 but...that drop may be technical and related to next week’s front month contract roll,” Shaun Osborne, chief FX strategist with Bank of Nova Scotia, said.

“If traders look through this development, the broader risk positive focus on re-opening and (hopefully) progress on therapeutics suggests the CAD mood should improve somewhat.”

In other currencies, the U.S. dollar steadied after a boost in risk sentiment early in the session curbed its advance. At last check, the U.S. dollar index, which weighs the greenback against a group of world currencies, was up 0.1 per cent.

Meanwhile, the Japanese yen, also seen as a barometer for investors’ risk appetite, was down 0.2 per cent while riskier currencies like the New Zealand and the Australian dollar gained 0.7 per cent and 0.4 per cent, respectively.

The euro was little changed at US$1.084.

More company news

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Shares of the Stars Group Inc. jumped 15 per cent in morning trading in Toronto after the company says it saw record revenue in its first quarter as COVID-19 led to an increase in online poker and casino games starting in March. It also said it continued to see increased activity in its online poker and casino business into the second quarter. In an update to its expectations for the three-month period ended March 31, the company says it expects revenue of approximately US$735-million, up from US$580-million in the first quarter of 2019.

Procter & Gamble Co reported an about 5-per-cent rise in quarterly sales as consumers stocked up on everything from diapers and detergents to toilet rolls amid sweeping lockdowns around the world. Net earnings attributable to the company rose to US$2.92-billion, or US$1.12 per share, in the third quarter ended March 31, from US$2.75-billion, or US$1.04 per share, a year earlier. Net sales rose to US$17.21-billion from US$16.46-billion.

Goldman Sachs said it expects iPhone shipment to drop 36 per cent during the third quarter due to coronavirus-related lockdowns around the world and downgraded Apple Inc stock to “sell.” The brokerage noted that average selling prices for consumer devices are likely to decline during a recession and remain weak well beyond the point when units recover. “We do not assume that this downturn results in Apple losing users from its installed base. We simply assume that existing users will keep devices longer and choose less expensive Apple options when they do buy a new device,” Goldman Sachs analysts said in a note.

Boeing Co said it will resume commercial airplane production next week in Washington state after suspending operations last month in response to the coronavirus pandemic, and the company’s chief executive told employees the aerospace industry will need financial help from the government. “Our industry will need the government’s support, which will be critical to ensuring access to credit markets and likely take the form of loans versus outright grants,” Boeing Chief Executive Dave Calhoun told employees in a letter seen by Reuters. “Our team continues to focus on the best ways to keep liquidity flowing through our business and to our supply chain until our customers are buying airplanes again,” it said.

Transat AT Inc. says it will use the federal emergency wage subsidy and recall all of its employees. Recalled employees will receive 75 per cent of their baseline remuneration, the travel company said.

Schlumberger NV said it recorded an US$8.5-billion charge to earnings as the world’s top oilfield services provider slashed the value of some of its units following the collapse of oil prices. The impairment charge led the company to report a net loss of US$7.38-billion, or US$5.32 per share, in the first quarter ended March 31, compared with a profit of US$421-million, or 30 US cents per share, a year earlier. Excluding charges and credits, the company earned 25 US cents per share.

Marlboro cigarette maker Altria Group Inc said chief executive officer Howard Willard, who is recovering from COVID-19, has stepped down after nearly three decades with the company. Chief financial officer Billy Gifford, who was last month named interim CEO when the company disclosed that Willard had taken a medical leave of absence, will assume the role on a permanent basis.

Economic news

(8:30 a.m. ET) Canada's international securities transactions for February.

(10 a.m. ET) U.S. leading indicators for March.

With Reuters and The Canadian Press

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